How to Navigate an Insurance Claim
If you have damage to your home or property, the thought of navigating an insurance claim can be daunting. The good news is that you don’t have to go it alone!
At Branch Environmental, we deal with insurance claims every day. As your mitigation and restoration contractor, we consider it part of our obligation to remove as much of the insurance burden from you as possible. We’ll help you through each step of the process, often communicating and negotiating on your behalf.
Whether you are using us or someone else, it’s helpful to understand the key steps of the process. Keeping things in line and on track will ensure your claim is processed efficiently, and you get the maximum amount owed to you for your repairs.
The first thing to understand is that your claim will be divided into two distinct phases, Mitigation and Restoration.
The mitigation phase is where you secure your property. The goal is to remove any hazards and protect the property from further loss due to water damage and mold. Generally, mitigation will include activities such as: removal of wet drywall & insulation, water extraction, removal of wet flooring, drying with fans and dehumidifiers, removal of fallen trees, boarding of windows, tarping roofs, etc…
During this phase, you will generally work fast without your insurance company pre-approving every expense.
Mitigation Step 1: Secure Your Family & Property
In the midst of property damage, your first priority should be securing the safety of your family and your property. Depending on your situation, this may mean relocating your family, calling 9-1-1, or calling utility providers to turn off electricity or gas.
After everyone is safe, you may decide to take measures to save valuable items from water damage. It’s not worth putting yourself in danger, but getting items out of water quickly can keep them from being destroyed.
Take as many pictures as you safely can to document the damage. Many insurance companies now require photos to prove or assess damage to your home.
Mitigation Step 2: Notify Your Insurance Provider
Once you are safe and your property is reasonably secured, give your insurance company a call. You may have a local agent, or you may call a national number. Either way, your goal right now is to open a claim, let them know what is going on then:
- Verify your coverage
- Verify your deductible
You want to be sure that your policy is in good standing, and the loss you are facing is a covered event before you start spending money. Typically, damage from wind, storm, fire, appliance leaks, or other perils will be covered. Damage due to flooding, faulty construction, or worn building materials is less likely to be covered. Every policy is different, so you want to confirm exactly what you are dealing with.
During the mitigation phase, your insurance provider is probably not going to send an adjuster rushing out to see you. Instead, they will likely advise you to proceed with mitigating the damage then they will send an adjuster out once the restoration is ready to begin.
Mitigation Step 3: Call a Restoration/Mitigation Contractor
As a homeowner and policyholder, it is your right and responsibility to protect your property from damage. In this case, that means mitigating water damage to prevent it from spreading and growing mold.
Time is of the essence in the mitigation phase and your insurance company will not expect you to approve expenses prior to completing work. They will want to you do what is necessary to dry the property and complete temporary repairs.
You should call a reputable water damage restoration contractor to handle the mitigation phase. They will be able to respond around the clock, and walk you through the necessary steps to take. Most contractors will also be able to walk you through the insurance claim process.
When your contractor arrives, they will likely ask you to sign a work authorization. The purpose of this is twofold:
- You will need to authorize them to conduct work in your home and accept standard liability and disclaimers.
- You will establish that you are responsible for payment of mitigation activities.
Hang on!… I thought insurance was paying for this?
Well, they will, but the agreement with the contractor is with you as the homeowner. The contractor will perform the work, then the insurance company will reimburse you. Then, you will pay the contractor.
If there are issues with insurance coverage, you will still be responsible for payment. This is why it’s a good idea to get your insurance company in the loop quickly. It may feel a little unnerving moving forward without an approved estimate, but that is the way the industry works. As long as you have verified your coverage your insurance company should not have an issue paying mitigation activities.
Mitigation Step 4: Get Paid
After the mitigation is complete, your contractor will create an invoice, and send it either to you or directly to your insurance adjuster. The adjuster will either negotiate the invoice with the contractor or pay it in full. Payment will come to you as the policyholder (less your deductible), then you will pay the contractor. Mitigation phase is complete!
While the mitigation was fast & furious, the restoration can slow down a good bit. This is where more parties get involved, negotiation takes place, and the project is planned.
Restoration Phase 1: Meet Your Adjuster & Contractor
Your mitigation contractor may also perform the restoration, or you may select a new contractor. Either way, you will want to arrange an on-site meeting with the adjuster and contractor, so they can agree on a scope of work.
When selecting your restoration contractor, be sure to choose someone with insurance claim experience who is willing to negotiate directly with the adjuster on your behalf. This will ensure the project moves quickly, and you get the most coverage for your repairs.
Restoration Phase 2: Negotiate an Agreed Estimate
Here is where the process can really slow down. Unlike the mitigation, the restoration will not proceed until an agreement has been reached with the insurance adjuster.
The contractor will start by submitting an initial estimate to the adjuster. The adjuster may accept the scope of work as-is or may come back with revisions.
Once both parties have agreed to the work that needs to be done and the amount that will be paid, the adjuster will release payment.
It is important to note that improvements or changes beyond the scope of the insurance claim will need to be negotiated directly with your contractor. You may choose to change paint colors, put in a better hardwood floor, or a variety of other things that may cause your restoration to cost more than the insurance settlement. You will be responsible for paying for any amount over and above the insurance settlement. After the scope of work is finalized, the contractor will give you a draw schedule and payment terms.
Restoration Phase 3: Wait for the $$$
The initial check your insurance company will send is likely going to be the Agreed Total (less) Depreciation (less) Remaining Deductible.
Initial Check = Agreed Total – Depreciation – Remaining Deductible
Don’t let that depreciation deduction scare you. They will pay it to you after the repairs are complete on the tail end of the project.
The check will come directly to you, and will likely be made out to both you and your mortgage company.
From there, call your mortgage company for further instructions on processing the check. They may have a local bank you can take it to, or you may have to endorse the check, and send it to them.
Next, you will have to wait for the mortgage company to process the check, and release the first payment to you. Depending on your mortgage company and size of the claim, they may release the full amount, or they may release only 50%.
During this whole process, you have a decision to make. Based on the payment terms of the contractor, do you want to wait for the cash, or do you want to proceed with your own money and/or credit?
This is an entirely personal decision that you need to make on your own. That said, it is a good idea to wait until that first check comes in from the insurance company. There is no better confirmation that everything is on track than that first released check. Even if you decide to go ahead and front the money while the mortgage company turns it’s slow wheels… at least you will have seen that the funds are actually there.
Restoration Phase 4: Complete Work
Once the money is settled, you can go ahead and pay the first draw to your contractor to get the ball rolling. Since every project is unique, there’s not a lot more to say about it here.
Restoration Phase 5: Supplement the Insurance Claim
Throughout the course of your restoration, it is likely that additional expenses will be incurred. Even the best estimator cannot foresee everything that will come up or be revealed during the project. Often time the damage turns out to be more extensive that anticipated and the scope of work changes.
This is typical for any insurance claim, and you don’t need to stress as the price rises. Take a deep breath! For routine items, your contractor will likely proceed without slowing down the project. For bigger things that arise, they will likely stop work to discuss with the adjuster. At the end of the project, these additional expenses will be submitted as a supplement to the initial claim.
Depending on the size and nature of the supplement, the insurance company will send out an addition check, and you will go back to step 3.
Generally speaking, you have 1 year to file items on a claim once it is opened.
Restoration Phase 6: Receive Depreciation and Mortgage Balance
After all the work is complete, you will be able to receive the balance of any money withheld.
Your adjuster may conduct a site visit or may simply ask for pictures. Once they see the job is done, they will release any depreciation that was withheld.
Next, your mortgage company will likely send out an inspector to verify the work is complete then release the remaining balance they are holding.
On many projects, these inspections and release of funds will happen once at the end. On larger projects, they may happen several times throughout the project to keep up with your contractor payment schedule.
Restoration Phase 7: Settle Up With Your Contractor
While funds are being approved and released by your insurance and mortgage company, you will still need to keep up payment terms with your contractor. Often, your contractor will work with you to manage the cash flow throughout the project.
That Wasn’t So Bad!
It’s a lot of moving pieces and the language is unfamiliar, but there is no need to be intimidated by the insurance claim process. Choosing the right contractor can go a long way towards a smooth resolution.
We’re Here When You Need Us
As a company, we believe that nobody should live or work in a building that makes them sick. We take every precaution to protect your health and the health of your family. We are experts in water damage mitigation, environmental safety, and insurance claim needs with over 25 years of experience. We treat your home or business like our own. Call us today!
Branch Environmental – Because nobody should live or work in a building that makes them sick.
For more information go to:
- Branch Environmental Keeping You Safe
- Top 10 Ways to Prevent Water Damage – Branch Environmental
- Burst Pipes and Flooding: A 6 Step Plan of Action – Branch Environmental
- How to Test Your Home’s Water Pressure – The Spruce
- Prepare Your Pipes for Winter – Branch Environmental
- 6 Tips to Keep Frozen Pipes from Bursting – Branch Environmental
- How to Avoid Utility Lines When Digging in Your Yard – The Spruce
- Mold’s Top 5 Hiding Places– Branch Environmental
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